Watching out for No. 1: Identifying motivating factors key to managing healthcare cost

August 1, 2009

Dr. Gawande documented the astounding per capita variation in Medicare expenditures at different locales and explored the reasons behind the discrepancies.

Dr. Gawande documented the astounding per capita variation in Medicare expenditures at different locales and explored the reasons behind the discrepancies. The article was well-written, thought-provoking and impossible to capsule summarize. However, for those who are partial to sound bites, he said this: "The most expensive piece of medical equipment is a doctor's pen."

According to Dr. Gawande, each Medicare enrollee in McAllen, Texas, costs $15,000 a year, twice as much as in Rochester, Minn., and $3,000 more than the average McAllen per capita income. A major reason for the high costs in places such as McAllen is that a significant number of physicians make recommendations that are different from colleagues in other places.

Dr. Gawande's article cited a study that analyzed differences in physician management and discovered several common problems.2 For well-studied approaches, such as routine mammograms for women age 50 and older, recommendations were relatively uniform across the country.

But for situations that lacked strong data to guide medical decisions, there was a wide variation in evaluation and treatment. Physicians in communities with high per capita healthcare costs utilized more expensive approaches.

Federal efforts

The federal government has invested in an effort to make these recommendations more uniform. The Agency for Healthcare Research and Quality (AHRQ, formerly known as the Agency for Health Care Policy and Research), the health services arm of the Department of Health and Human Services, is responsible for research on healthcare quality, costs, outcomes and patient safety. It awards contracts to evidence-based practice centers to create guidelines of care.

Both the American Medical Association and America's Health Insurance Plans also support the creation of guidelines. Sensible guidelines can be most readily established for common, well-studied conditions such as heart attacks and hypertension. For most other diseases, consensus agreement from experienced clinicians is considered acceptable. While establishing guidelines of care for these less well-studied conditions is a well-intentioned initiative, self-interest may dictate some guidelines as much as data. For some participating physicians, self-interest comes with the AHRQ contract that supports their salary and the additional publications that add to their CV. For others, published guidelines can validate a revenue-generating clinical activity.

Impact on dermatology

Most dermatologic diseases do not have the kind of data that supports well-established guidelines. The only guidelines topics that are approved by the American Academy of Dermatology (AAD) and published are acne, atopic dermatitis and psoriasis.

The majority of information in the psoriasis guidelines understandably emphasizes the newer, more expensive biologic agents. The burst of revenue that supported collection of this data, however, has been a major incentive for many dermatologists.

Patients with severe psoriasis who were previously considered frustrating and unprofitable to treat became coveted as subjects to participate in clinical trials. Physicians experienced in using these drugs became well-compensated and well-respected "thought leaders." Unfortunately, there is no comparable incentive for learning more about the older, less-expensive drugs.

While ambulatory medicine in general - and dermatologic problems in particular - comprise a very small piece of the healthcare pie, Dr. Gawande's analysis gave me pause. I thought about the many ways that my medical colleagues and I use and abuse the system.

Self-interest is a very powerful, and not always self-evident, force. Higher healthcare costs do not correlate with academic reputation or healthcare outcomes. Additional tests and more treatment can be associated with more risks. These often-overlooked risks can sometimes outweigh the risks of living with the disease.

Impact on medical practice

The cost of medical care is not a subject taught in medical school or residency. However, the moment a physician starts practicing, it becomes a priority, from learning which treatments your patients can afford and which services are routinely reimbursed to understanding the costs of administrators, nurses, schedulers, billing and collections, accountants, lawyers, per-square-foot for office space, equipment, supplies, EMR and malpractice insurance.

All of these financial concerns occur in the setting of an average $250,000 debt that follows most residents out of their training.